Highlights of Our Favorite Bankruptcy Quotes This Year

Monday is Labor Day. That means that the next three days are not only your last opportunity to wear white, but also the perfect time to enjoy the Weil Bankruptcy Blog’s last bit of Bankruptcy Beach Reading. To help you pass the time and forget that “summer’s almost gone” and “winter is coming,” check out the shortlist of our favorite colorful bankruptcy quotes from the last few months.

The Honorable Michael Romero signals where he is going at the outset of his decision, which starts, “‘Life imitates art.’ The within dispute is reminiscent of Moby Dick, where Herman Mellville describes Captain Ahab’s self-destructive obsession to destroy a whale that had injured him in the past.”

Judge Romero’s decision is full of literary allusion:

Like Captain Ahab, the Randall Creditors have been obsessed with pursuing Experient into oblivion. . . . To phrase it plainly, the Court is unpersuaded by each of their objections to confirmation, and much like the fate of Captain Ahab, the objections to confirmation raised here are destined for the bottom of the deep blue sea.

Postscript

For good measure, Judge Romero also threw in this gem: “The Randall Creditors argue the Second Amended Plan unfairly discriminates between classes in violation of the fair and equitable test, and violates the absolute priority rule. ‘Pure applesauce.’”

Referring to a litigant who had violated a protective order and used confidential information for his own benefit, Judge Faris did not hold back:

This is the most egregious contempt I have seen in my entire career as a lawyer and a judge. . . . I would impose a substantially larger fine if I had the power to do so. Himmelfarb violated the orders because he hoped to garner tens of millions of dollars. A $9,000.00 fine is not even a slap on the wrist.

In re Walters features a chapter 11 debtor claiming that his mortgage debt was satisfied using self-created “International Promissory Notes” that purported to be legal tender of the United States. Mr. Walters also submitted a letter purporting to be from Pope Francis in support of the International Promissory Notes, as well as a letter objecting to the court’s personal jurisdiction over him and threatening “monetary fines, removal from position, arrest and trial in the world court for crimes against humanity.”

Any time a judge refers to his or her “war stories” in the first sentence of a decision, you know you are in for a good read…

While it is safe to say the average person does not have a working knowledge of the United States Bankruptcy Code, one widely held belief is that someone who files bankruptcy gets to walk away from their debts.3 [FN 3 – This statement is based upon almost 32 years’ experience as a bankruptcy lawyer and judge. I will spare you the war stories.] Those who work hard to pay what they owe find little comfort in this concept. In order to preserve the integrity of and support for the bankruptcy process, two principles have emerged: (1) a discharge in bankruptcy is reserved for the “honest but unfortunate debtor,” and (2) bankruptcy discharges are not for sale. While the first may not hold true in each and every case, the second one is absolutely essential to the survival of the system. These cases involve objections to discharge filed by creditors who wish to give up the fight. Settlements have been reached, each of which, if approved, will benefit the parties and result in the debtors being granted discharges. No one has objected; indeed, the United States Trustee supports both compromises. The question is whether the Court should approve them.

. . .

McCutchen is free to buy a restaurant from Walsh. He may not buy a discharge from anyone.

The term “etc.” has no substantive force (citing Yul Brenner in the The King and I):

[T]he court does not give credence to Defendants’ claims . . . based on “etc.,” which has no substantive force, see, Wikipedia entry for “etcetera,” stating that it “is a Latin expression that means “and other things,” or “and so forth”) http://en.wikipedia.org.wiki/Et_cetera, accessed on March 30, 2015 (“In the 1956 film The King and I, Yul Brynner, who played King Mongkut of Siam, repeatedly used the phrase, ‘… et cetera, et cetera, et cetera …’, to characterize the King as wanting to impress with his great knowledge of many things and his importance in not having to detail them. This was based on the usage in the book Anna and the King of Siam which related the real king’s playful interest in numerous things, with the phrase, ‘& c, & c.’) (footnotes omitted).

It’s not often that we get to read bench warrants written by bankruptcy judges. After two lawyers failed to comply with a court order to return legal fees to a chapter 7 debtor and pay sanctions, Judge Charles E. Rendlen III of the United States Bankruptcy Court for the Eastern District of Missouri issued a bench warrant for their arrest:

The Court is disappointed and irritated, although not surprised, that the seemingly never-ending contemptuous attitude of Robinson and Walton has now resulted in the need for the utilization of the valuable time, resources, and expertise of the U.S. Marshals. The Court is confident that the U.S. Marshals have many matters to address involving dangerous persons and urgent circumstances, and do not need the inconvenience of having to chase down bad-actor attorneys who believe that contempt is an acceptable form of professional practice.

The character Walter Sobchak once said, “This is bowling. There are rules.” If only the same could be said regarding how the law classifies property items in a bowling alley. The issue in this case is whether various pieces of property at the Antioch Bowling Lanes qualify as fixtures or personalty under Illinois law. A finding that the items constitute fixtures would inure to the benefit of FirstMerit Bank, N.A., which seeks to foreclose on a mortgage; a finding that the items constitute personalty would allow a creditor, Kenneth Sterbenz, to lay claim to the items. What complicates the inquiry is that the governing state law principles derive from dated and, at times, inconsistent caselaw. In some instances, courts have relied on certain criteria in holding that an item was a fixture, while on other occasions, different criteria have proved decisive.

Postscript

So as not to leave you in suspense, the court concluded that the debtor’s bowling lanes, including approaches, lane gutters, bowling ball return system, pin setting machines, and scoring consoles, were essential to the real property’s long-time use as a bowling alley and were fixtures, subject to FirstMerit’s mortgage. The court held that the laneside tables and chairs were personalty and could, therefore, be removed and sold by Kenneth Sterbenz.

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Enjoy your long weekend! The Weil Bankruptcy Blog will return on Tuesday with more exciting reports from the restructuring world.

In most cases denial of discharge requires the filing of an adversary proceeding. If a discharge is not contested, one is granted as a matter of course. It would be naive to suggest that every dishonest debtor is the subject of a complaint objecting to discharge.

Walter Sobchak, played by John Goodman, is the mercurial sidekick to “The Dude” in The Big Lebowski.